Table of Contents
Why does a company need to go public?
By going public, a company provides liquidity for its shareholders. When a company grows, its major shareholders may wish to cash in on the wealth they have tied up in the business. The public offer creates a market for the company’s shares that gives investors the ability to sell their holdings.
What are the possible reasons why Facebook wants to go public?
The main reason that the company decided to go public is because it crossed the threshold of 500 shareholders, according to Reuters financial blogger Felix Salmon. Facebook reportedly turned down a $75 million offer from Viacom in 2006.
What is one advantage of a company going public?
One advantage of a company going public through an IPO is the ability to raise substantial capital now and in the future on public capital markets when SEC registration filings, including shelf offerings, become effective.
What are the disadvantages of a company going public?
The Process Can Be Expensive. Going public is an expensive, time-consuming process.
What was the first company to go public?
The Dutch East India Company (VOC)
The Dutch East India Company (VOC) became the first company in history to issue bonds and shares of stock to the general public. In other words, the VOC was officially the first publicly traded company, because it was the first company ever to be actually listed on an official stock exchange.
What are the cons of going public?
Disadvantages
- Loss of Control: The biggest disadvantage of taking your company public is that the promoters tend to lose control over the workings of the corporation.
- Loss of Privacy: Privacy can be an extremely important asset when it comes to conducting business.
- Performance Pressure:
- Cost of Compliance:
Why should companies not go public?
Going Public When the company’s growth or survival requires more capital than those sources can offer, it may decide to sell all or part of the business by offering its stock to the public. By doing so, companies become subject to greater scrutiny by regulators and shareholders.
What are the pros and cons of going public for a company?
The Pros and Cons of Going Public
- 1) Cost. No, the transition to an IPO is not a cheap one.
- 2) Financial Reporting. Taking a company public also makes much of that company’s information and data public.
- 3) Distractions Caused by the IPO Process.
- 4) Investor Appetite.
- The Benefits of Going Public.